New York Imposes Stricter Debit Card and Direct Deposit Wage Payment Rules

Required Notices.  Employers will need to provide a written notice to employees containing: (A) information on the employee’s different options for receiving wage payments; (B) notice that employees are not required to receive wages by payroll debit card or direct deposit (with limited exceptions); and (C) notice that employees will not be charged additional fees to access their wages via payroll debit card.   Additionally, employers must also provide a list of locations where employees can access their wages without additional charge within “reasonable proximity” to the employee’s residence or workplace.

Written Consent for Wage Payment.  Employers must obtain written consent from an employee to receive wages via direct deposit or payroll debit card, with limited exceptions.  Further, employers cannot make these methods of wage payment mandatory as a condition of employment.

All written notices and consents must be provided and obtained in the English and the primary language of any non-English speaking employee, if the NYDOL has provided the notice and form in that language.

Payroll Debit Card Requirements. In addition to the above requirements, employers must also follow the below regulations when using payroll debit cards to make wage payments:

1. Employers must wait at least seven business days after obtaining employee consent to make payment through the payroll debit card.
2. As stated above, employees may not be charged for fees associated with the payroll debit card, including, but not limited to: point-of-sale transactions, account inactivity, overdraft, shortage or low balance status, maintenance, accessing the card online or at any ATM, telephone or online customer service, providing employee’s written statements, transaction histories, or the issue policies, and many more.
3. Employers cannot pass on any costs associated with payroll debit card accounts to the employee, or receive any perks from the issues (such as card member rewards or “thank you” cashback points).
4. The payroll debit card cannot be linked to any form of credit.
5. Wages paid to the debit card cannot expire, although an account can be closed for inactivity if the issuer gives “reasonable notice” to the employee and reasonable funds are refunded within seven days.
6. The employer must provide written notice in “plain language” of any changes to the terms and conditions of the debit card at least 30 days before such changes go into effect.
7. Employees who are covered by a valid collective bargaining agreement must receive approval from their union before receiving wages by debit card.

Action Items

1. If offering direct deposit or payroll debit cards, review your current payroll practices to ensure that appropriate notices and consent forms are distributed and collected.
2. Notify employees who currently receive direct deposit or payroll debit card of their new right to withdraw consent to such wage payment methods by March 7, 2017.
3. Consult with existing or potential payroll debit card issuers to ensure that procedures for notices and fees are in compliance.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

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